The Case for Competency Models

Competency models provide talent leaders with the insights needed to design a clear and effective talent management program. Most importantly, they improve and integrate every step in the talent management cycle: recruitment, onboarding, development, performance management, career development and succession.

A talent management function without competency models is like a house without furniture. Companies understand the need for this type of systematic approach: Organizations included in a 2013 report by technology firm CEB projected a 27 percent increase in competency modeling spending the following year, with the trend expected to continue thereafter.

Competencies are knowledge, skills, traits and behaviors that workers use to do their jobs. A competency model is a group of 10 to 30 competencies that are required for successful job performance, and competency modeling is a valid and systematic approach for selecting the right competencies.

In contrast to job descriptions, competency models typically are built by focusing on effective performers, not the job. Subject-matter experts such as supervisors and job incumbents usually provide direct input and, in some cases, effective performers are observed. It is preferable to write competency models that define the characteristics of high-performing individuals. Exemplary performers do certain things better than others; they also do some things entirely different.

Stepan Co. is a Northfield, Illinois-based chemical manufacturer with plants on four continents. Stepan implemented an online talent management system about two years ago, and shortly after began using competency modeling.

Joe Misurac, the company’s manager of global learning and organization development, along with Janice Galuszka and Ariana Paz in human resources, drive the competency modeling process at Stepan. Misurac has been implementing competency programs since 2008, and he, along with Galuszka and Paz, see many benefits of the approach.

Above all, Misurac said competency models provide talent managers with a clearer idea of skills people need to develop. “Competencies help us to effectively use limited resources,” he said. “I can use intuition, but the goal is to reduce subjectivity. Competency models show the standard. Competencies allow Stepan to create an integrated talent management system that ties learning and other HR processes together.”

Galuszka identified global consistency as a huge advantage for using competency models at Stepan. “We can apply the role profiles all over the world, and then we can start bringing people back and forth,” she said. “The confusion will be gone. Before, everyone was going their own ways.”

“The competency models make staff much more aware and provide a framework for self-development and guidance,” Paz added. “Otherwise, staff just hope and wait for their employer to promote them.”

Since introducing competency models, Stepan has seen an uptick in promotions from within, Misurac said.

Steps to Build a Competency Model

Stepan has used three components to build its competency models.

1. Core-level competencies: Stepan has defined specific core competencies for five levels, from individual contributors to executives. The company has also created four levels of technical-track core competencies for those who will progress technically without managing other people.

2. Functional competencies: For each major function at Stepan, nontechnical and technical competencies needed for everyone in the function are identified.

3. Job family competencies: If a family of jobs exists, competencies are described for the family and required proficiencies are adjusted based on what is needed for each role.

For instance, consider an environmental engineer. The core competencies selected are for individual contributors on a technical track. The functional competencies are for anyone in the Environmental Health and Safety function and the job family competencies are for various levels of EHS engineers. Proficiencies vary by the job.

Misurac, Galuszka and Paz provide the following insights and advice for how to fine-tune competency modeling:

  • Introduce competency modeling selectively when it can meet a real business need rather than rolling it out universally or according to a rigid schedule. For example, Misurac suggests competency modeling as one important component when approached for help with succession planning and job restructuring.
  • Before a competency modeling process is implemented, it is important that HR has a true understanding of the process and the time it will take. Hearing or reading about it is a start, but it doesn’t fully sink in until after going through a pilot with one group.
  • Pre-meeting communications are key, often beginning with a private meeting with a department head, followed by a group meeting with the leadership team. Without pre-meetings, people may be uncommitted or a little lost.
  • Get the right people in the room. Talent leaders need decisive people who have the vision of where the organization is going.
  • Having managers or staff create competency models themselves doesn’t work very well. Instead, use experienced competency modeling facilitators.
  • Having a competency-modeling consultant is beneficial.

Customizing Competency Modeling

Competency modeling can and should be tailored to each organization’s own priorities, objectives, resources and timelines, as well as its own unique challenges.

While there are a number of ways to customize the process, here are five questions to consider.

1. How will you use competency models? If staffing is the goal, talent leaders will want behavioral interviewing questions. For performance management, core competency models alone may be sufficient. Succession planning can be improved by creating supervisor and leadership models and possibly models for critical and vulnerable positions. Career development benefits from creating sample career ladders by combining a series of competency models.

2. What will you model? This question gets at the cost-benefit of different levels of detail. Leaders might choose to create some or all of the following types of models:

  • Jobs (i.e., HR director)
  • Job categories (i.e., supervisor)
  • Departments (i.e., marketing)
  • Occupations (i.e., administrative)
  • Categories (i.e., leadership or high potentials)

Some organizations can get by with one or two competency models; others have hundreds. Don’t know where to start? A multilevel core value or competency model immediately provides something for everyone, and it will speed the development of more detailed competency models.

3. What competency modeling process will you use? Here are several choices:

  • Subject-matter expert panel discussions. This is most common, because leaders can focus on jobs or expedite by focusing on job families.
  • Observing exemplary performers. It can provide good results, but it is time-consuming.
  • Critical incident interviews. It is good for developing competencies and behaviors, but time-consuming.
  • Structured surveys of supervisors and employees. Although preferred by some organizations, we haven’t seen it produce good results.
  • Role-based competency modeling. First, associate competencies to general tasks critical to the organization, like “writing technical reports.” To develop a competency model, confirm which general tasks apply to jobs.

4. Who should participate in the competency modeling process? It could be supervisors, job incumbents or technical experts. Select persons who understand the job well and are credible.

5. Where do you get competencies for the project? Creating a comprehensive competency library isn’t practical for most organizations. Therefore, many license commercially available libraries. Governmental bodies and professional associations are also good sources. 

A desirable library will typically have some or all of the following:

  • Technical, nontechnical competencies
  • Behavioral indicators
  • Customized rating scales
  • Behavioral interview, selection questions
  • Development resources
  • Generic competency models

Best Practices

As important as competency modeling is, not enough studies have been done to identify what really works. A study by Michael Campion, “Doing Competencies Well: Best Practices in Competency Modeling,” is notable. In it, Campion identifies 20 best practices, which are listed below followed by my experience.

1. Consider organizational context. What are the primary goals? How much expertise and tolerance does the organization have for competency modeling?

2. Link competency models to organizational goals and objectives. Competencies are an important stepping stone, but not the end goal.

3. Start at the top. We’ve seen success starting from multiple parts of the organization so we suggest starting where the most value can be gained.

4. Use rigorous job analysis methods to develop competencies. It may yield more valid results, but talent leaders must design a time-efficient process.

5. Consider future-oriented job requirements. If talent managers are planning to transition soon, competency modeling the new position is a great way to communicate expectations.

6. Use additional unique methods. The subject-matter expert method is traditional, but don’t fear introducing innovation into competency modeling. Continually refine and improve.

Organizing and Presenting Competency Information

7. Define the anatomy of a competency (the language of competencies). At a minimum, require a short description and four or more behavioral indicators.

8. Define levels of proficiency on competencies. Build levels of proficiency by using a rating scale, not identification of different behavioral indicators per level. Creating separate behaviors for each level is difficult, even for trained psychologists.

9. Use organizational language. Good libraries won’t need extensive revisions, but do modify language.

10. Include both fundamental (cross-job) and technical (job-specific) competencies. Failure to include technical competencies is one of the most common and damaging errors.

11. Use competency libraries. A competency library is essential for consistency and efficiency, and it is generally too much labor to create your own.

12. Achieve the proper level of granularity (number of competencies and amount of detail). For example, a lot of detail is useful to develop training, but less is needed for most other purposes.

13. Use diagrams, pictures and heuristics to communicate competency models to employees. Just like the communications and guides used for other HR programs.

Using Competency Information

14. Use organizational development techniques to ensure competency modeling acceptance. Change management is often overlooked, but it makes a big difference.

15. Use competencies to develop HR’s systems (hiring, appraisal, promotion, compensation). This is the whole point; it will vastly improve talent management processes and online systems.

16. Use competencies to align HR systems. Create an integrated talent management system and enjoy the many benefits that integration brings.

17. Use competencies to develop a practical “theory” of effective job performance for the organization. Competency models clearly define critical knowledge and behaviors — a real competitive advantage. It makes the very subjective much clearer for all parties.

18. Use information technology to enhance the usability of competency models. Technology enables a full-fledged competency-based talent management system. And use technology to create competency models.

19. Maintain the currency of competencies over time. Keeping organization and function core competencies current is one of the easiest ways to do this.

20. Use competency modeling for legal defensibility. Show competencies are job related and identified by subject matter experts.